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When most people think about the Empire State, they think about New York City — and attractions like Grand Central Terminal, the Empire State Building, and Central Park. While owning rental properties in the Big Apple can be quite lucrative, pricey home values make the barrier to entry exceptionally high and, unfortunately, out of reach for most real estate investors.
Luckily, New York has a ton of hidden gems within commuting distance of the city, as well as a lot of great places to check out throughout the state, including the Catskill Mountains, the Finger Lakes, the Adirondacks, and the Baseball Hall of Fame.
To help you kick off your rental property investment journey, we found the five most populated cities beyond Manhattan and evaluated their:
- Investment potential
- Rental rates
Looking to invest in New York rental property? Our friends at Clever Real Estate make it easy to connect with the best local real estate agents. Clever is a free service that will personally match you with agents from Keller Williams, RE/MAX, and other leading brokerages.
Best of all, Clever Cash Back will put 0.5% of the purchase price back in your pocket after closing. In New York, where the median price for a single-family home is $400,158, that's up to $2,000 back in your pocket.
1. The Best Place to Buy Rental Property in New York: Hempstead
Located in western Long Island, Hempstead is a town that’s roughly 30 miles outside of Manhattan, making it an ideal spot for renters who work in the city but don’t want to pay city rent. If Hempstead were a city, it’d be the second biggest in the state, with nearly 800,000 people calling it home.
According to Zillow, the average home in Hempstead can be yours for slightly less than $591,000. Since housing prices have increased nearly 45% since 2015, Hempstead is undoubtedly an area that has a lot of investment potential. Plus, two-bedroom apartments are currently renting for roughly $2,800 — more than twice the national average— which provides the opportunity for generous returns on your investment.
Located a quick 30-minute drive from Jones Beach and an hour from Yankee Stadium, Hempstead is a perfect place for those who want to be near the hustle and bustle of New York City — but not in it directly.
Drive an hour east from Hempstead and you’ll eventually run into Brookhaven, a town on Long Island located about 50 miles outside New York City where some 480,000-plus people live. The town is home to Stony Brook University and Brookhaven National Laboratory, a lab managed by the U.S. Department of Energy.
The median home price in Brookhaven is nearly $550,000. Since prices have been steadily climbing over the last several years and it can be challenging to find a place to rent, Brookhaven can be one of the best places to buy a rental property in New York.
Situated nearly smack in the middle of Long Island, Brookhaven puts you within striking distance of everything the island has to offer, from Southampton and Montauk to Belmont Park, the famous horseracing track, and Rockaway Hunting Club, America’s oldest country club.
Islip is a town located on southern Long Island. Nearly 340,000 year-round residents make their homes in this coastal town — and since it's an easy hour-and-a-half drive outside New York City, Islip offers short-term rental investment opportunities, too.
According to Realtor.com, the median listing price on homes in Islip has increased 25% since 2019, growing from nearly $400,000 to almost $500,000 in three short years. That being the case, buying a rental property in Islip can be an intelligent investment decision — particularly when considering the average rent price is nearly $600 more in Islip than elsewhere in America. At the time of writing, one-bedroom apartments are fetching $2,300/month.
Home to all sorts of natural beauty — including Captree State Park, South Shore Nature Center, Seatuck National Wildlife Refuge, and West Islip Beach — Islip is the perfect location for folks who love quaint towns and the outdoors but don’t want to be too far from the big city.
4. Oyster Bay
Are you sensing a theme yet? Oyster Bay is a town on Long Island that’s about an hour outside New York City and has slightly more than 300,000 residents. Perhaps most notably, Oyster Bay is home to Sagamore Hill, President Theodore Roosevelt’s summer home for more than 30 years. The town is also home to a Long Island Sound inlet called Oyster Bay Harbor.
In May 2019, Oyster Bay had a median home sales price of $451,500. Fast-forward to today, and that number has jumped to $770,000 — an increase of 71% in three years. Any way you slice it, that’s a pretty significant increase.
That said, two-bedroom apartments in Oyster Bay are currently renting for $3,000/month. So, if you’re able to land a great deal, you might be able to unlock a pretty hefty recurring revenue stream from an investment apartment.
By now, you might be wondering whether there are any places outside Long Island that are ideal for real estate investments. And that brings us to Buffalo, the second-largest city in New York that boasts more than 278,000 residents. Unlike the first four entries on this list, Buffalo is nowhere near New York City; it’s essentially located in the exact opposite corner of the state, some 375 miles away.
But that distance has a tremendous impact on real estate prices. According to Zillow, the average price for a home in Buffalo is about $203,500. While that price is considerably lower than the other towns mentioned on this list, it’s still an impressive increase from the $92,000 the average house commanded in January 2015. With two-bedroom apartments ranging between $1,000 and $2,000, Buffalo presents an interesting opportunity for real estate investors.
Buffalo is home to two major professional sports teams, including the Buffalo Bills and the Buffalo Sabres. It’s also where buffalo wings were created, where the Goo Goo Dolls made their first records, and a quick 25-minute drive away from Niagara Falls.
Speaking of Teddy Roosevelt, here’s a fun fact: The 26th president was sworn in at Wilcox Mansion (now known as the Theodore Roosevelt Inaugural Site) in Buffalo following the assassination of President William McKinley.
Next Steps for Your Rental Property Investment
From Hempstead's convenience for commuters to Islip's beachy coast, New York offers an abundance of real estate investment opportunities.
To get started, we recommend shopping around for a local real estate agent. A great agent can help you jump on promising rental property opportunities, compete against other buyers, and even stay one step ahead of MLS listings. Our friends at Clever can introduce you to the best New York real estate agents today, including agents who specialize in 1031 exchanges and investment opportunities.
Best of all, real estate investors who find the perfect agent through Clever can get up to 0.5% cash back at closing — cash you can use to offset closing costs, fix up your rental property, or simply enjoy as extra money in your pocket.
What is the best place to buy rental property in New York?
Hempstead is the best place to buy rental property in New York, followed by Brookhaven and Islip. Learn how population growth, job opportunities, and home values impact rental property investments.
Is rental property a good investment?
In general, rental property is considered a sound investment, but a rental property's success or failure depends on both local market conditions and business strategy. Learn how to spot good investment opportunities — and save time, energy, and money — before buying a rental property in New York.
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